I’ve been told many times over that it’ll never happen: The war on coal is nothing to worry about.
It’s the same heated debate that’s been taking place for years, and I may have heard just about every conceivable bullish angle from the coal crowd.
Well, I’ve got some bad news for them: dark days are ahead for the world’s dirtiest source of energy. Moreover, I think it’s only a short matter of time before they capitulate.
Fortunately, there’s a serious silver lining for them, with one particular coal bull turning a profit the entire way.
The Electric Battleground
There’s absolutely no question that the electric power sector is the biggest battleground in the war on coal… and there are two major reasons why.
First, the electric power sector accounts for roughly 40% of the United States’ primary energy consumption — far more than both the industrial and residential & commercial sectors combined. (Considering that crude oil makes up 93% of demand in the transportation sector, we can safely leave it out… for now.)
More important than the sheer size of the electric power sector, however, is the fact that 91% of this demand is met by coal.
Unfortunately for the coal industry, natural gas is slowly taking over.
But you don’t have to take my word for it — simply look at the EIA’s consumption data over the years. Coal generation in the electric power sector fell by 23% between 2007 and 2012.
That decline won’t reverse itself even if the number of coal lobbyists in Washington, D.C. tripled tomorrow.
As I’ve said before, less coal means more natural gas.
Not helping matters for coal is the fact that one of the key drivers for natural gas consumption over the next several decades will be its growth in the electric power sector.
But don’t get too discouraged. In today’s energy climate, a coal bull can always turn a profit.
In fact, there’s one person I can always count on to be optimistic over coal in the long run. One of my cubicle-mates, Christian DeHaemer, never shies away from a good argument.
Practically every morning, he strides confidently past my desk to whisper some technical point my way — just loudly enough that I’m the only one to hear it.
Today, however, there was different kind of ring in his tone. Rather than revealing his daily insight, he only offered one bit of advice:
“It’s win-win,” he barked.
Truth be told, I knew immediately that he had a point. As if on cue, he slipped me a chart he had printed out just for this occasion, which I recognized right away.
The reality of our energy situation is that both coal and natural gas will play a huge role in the electric power sector for decades to come. In 2012, the two combined to account for 67% of the electric generation. By 2040, that share doesn’t change, and coal still makes up 32% of the sector.
“So you’re not concerned about shale gas production flooding the market again and forcing another glut?” I asked. “Natural gas might be trading over five bucks now, but it was almost three dollars not too long ago.”
Even after a brutally cold winter, it’s still hard to dismiss the 665 trillion cubic feet of technically recoverable shale gas resources buried beneath U.S. soil. No matter how much it feels like we’re stuck in a never-ending winter, spring is just a month and a half away.
“Not only am I not worried, I’m betting on it!” he laughed. “I told you, it’s the one of the few win-win scenarios out there right now.”
You see, that’s precisely where Christian’s three best gas stocks come into play. The longer natural gas stays cheap and abundant, the more the U.S. will depend on these plays.
And perhaps the most intriguing part is that none of them produce so much as a single cubic foot of natural gas.
I suggest you check out all the details right here.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
